Business and Accounting Studies: Grade 10

Business and Accounting
Studies
Teachers' Guide
Grade 10
(To be implemeted from 2015)
Faculty of Science and Technology

Department of Commerce
National Institute of Education
Maharagama
Sri Lanka
Web:www.nie.lk
Email: info@nie.lk
Fo Pa
Studies
Teachers' Guide
Grade 10

Maharagama
Sri Lanka
Fo Pa
Business and Accounting Studies
Grade 10
First Edition -2014
ISBN
Departmrnt of Commerce
Maharagama
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Message from the Director General ……………….
The first phase of the new competency based curriculum, with 8 years curriculum cycle was introduced to
secondary education in Sri Lanka in 2007 replacing the existed content based education system with basic
objective of developing the national level competencies recommended by the National Education
Commission.
The second phase of the curriculum cycle to be introduced to grades 6 and 10 starts from 2015. For this
purpose, National Institute of Education has introduced a rationalization process and developed rationalized
syllabi for these grades using research based outcomes and various suggestions made by different
stakeholders.
In the rationalization process, vertical integration has been used to systematically develop the competency
levels in all subjects from fundamentals to advanced levels using the bottom up approach. Horizontal
integration is used to minimize the overlapping in the subject content and to reduce the content over loading
in the subjects to produce more students friendly and implementable curricular.
A new format has been introduced to the teachers’ guide with the aim of providing the teachers with the
required guidance in the areas of lesson planning, teaching, carrying out activities and measurement and
evaluation. These guidelines will help the teachers to be more productive and effective in the classroom.
The new teachers’ guides provide freedom to the teachers in selecting quality inputs and additional activities
to develop the competencies of the students. The new teachers’ guides are not loaded with subject
content that is covered in the recommended textbooks. Therefore, it is essential for the teacher to use the
new teachers’ guides simultaneously with the relevant textbooks prepared by Education Publication
Department as reference guides to be more aware of the syllabi.
The basic objectives of the rationalized syllabi and the new format of teachers’ guide and newly developed
textbooks are to bring a shift from the teacher centered education system into a student centered and more
activity based education system in order to develop the competencies and skills of the school leavers and
to enable the system to produce suitable human resource to the world of work.
I would like to take this opportunity to thank the members of Academic Affairs Board and Council of
National Institute of Education and all the resource persons who have immensely contributed in developing
these new teacher guides.
Director General
i
Message from the Deputy Director General
Education from the past has been constantly changing and forging forward. In
recent years, these changes have become quite rapid. Past two decades have
witnessed a high surge in teaching methodologies as well as in the use of techno-
logical tools and in the field of knowledge creation.
Accordingly, the National Institute of Education is in the process or taking ap-

propriate and timely steps with regard to the education reforms of 2015.
It is with immense pleasure that this Teachers' Guide where the new curriculum
has been planned based on a thorough study of the changes that have taken
place in the global context adopted in terms of local needs based on a student-
centered learning-teaching approach, is presented to you teachers who serve as
the pilots of the schools system.
An instructional manual of this nature is provided to you with the confidence

that, you will be able to make a greater contribution using this.
There is no doubt whatsoever that this Teachers' Guide will provide substantial
support in the classroom teaching-learning process at the same time. Further-
more the teacher will have a better control of the classroom with a constructive
approach in selecting modern resource materials and following guide lines given
in this book.
I trust that through the careful study of this Teachers Guide provided to you,
you will act with commitment in the generation of a greatly creative set of stu-
dents capable of helping Sri Lanka move socially as well as economically for-
ward.
This Teachers' Guide is the outcome of the expertise and unflagging commit-
ment of a team of subject teachers and academics in the field Education.
While expressing my sincere appreciation of this task performed for the devel-
opment of the education system, my heartfelt thanks go to all of you who con-
tributed your knowledge and skills in making this document such a landmark in
the field.
M.F.S.P. Jayawardhana
Deputy Director General
Guidence and Approval ( Acedemic Affairs Board
Subject Co-ordination ( Dr.A. Sivanesharajah

Director
( P.H.Kusumawathie
Senior Lecturer
National Institute of Education'
Writing Pannel ( Internal

P.H.Kusumawathie
External
Sirima Nanayakkra,
ISA,Zonal Education Office, Elpitiya
C.L.M.Navas,
ISA,Zonal Education Office, Ibbagamuwa.
M.H.M.Buhary,ISA(retired)
Language Editing ( S.A.D.Gunapala

Lecturer, Bed Degree Program
National Institute of Education'
K.D. Persival
Lecturer
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Instruction for the Use of the Teachers' Guide
This Teachers’ Guide has been prepared for Grade 10 based on the syllabus for Business
and Accounting Studies proposed to be implemented for G.C.E. ( O/L) from 2015.
Model activities have been included here as guidance in the planning of teachers’ learning-
teaching process so as ensure the development of the students’ competencies.
This teachers’ Guide has been prepared in keeping with the order in which the learning-
teaching process should be implemented in the classroom. Learning outcomes have been
presented for every competency level in the syllabus. It is expected that teacher will
implemented a student-centered learning-teaching procedure to ensure that all the students
achieve these learning outcomes and the relevant competencies. For this purpose the
learning-teaching process has been presented under each competency level in order to
provide you with guidance. It is by no means compulsory that you conform to these
instructions in that very form itself, you, as a creative individuals, have complete freedom
to conform to any other student-centered learning-teaching procedure you consider for
students.
Similarly, included in this teachers’ guide are the basic terms and concepts related to the
subject area under each competency level. They will serve as guidance to the subject
matter you should elicit through the activities in the classroom as well as for the notes you
give the students.
P.H.Kusumawathie
Senior Lecturer
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Content
Page
i
Message from the Director General
ii
Message from the Deputy Director General
iii
Introduction
iv
Curriculum Committee
Instruction for the Use of the Teachers' Guide v
Syllabus vi- xx
Guidence for Learning-Teaching Process 1 - 74
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Studies
Syllabus
Grade 10
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1.0 Introduction
This syllabus is to be implemented in 2015. Through this syllabus it is expected to provide theoretical
and practical knowledge to the student that would give him guidance in his future livelihood, through the
provision of business knowledge, recording of transactions, evaluation of business results, information
technology, development of desire for saving and investment and business management. Similarly, it is
expected that the initial foundation will be laid for the creation of entrepreneurs as well as other profes-
sionals by teaching this subject. Through this, it is also expected to build the human resources necessary
for the economic and social development of the country.
Similarly, through the pedagogical approach, it is expected to build in the students an integrated person-
ality with focus on student centered, competency based activities. Further, it is expected that this
syllabus will serve in the creation of a citizen who posses no burden to society, acts with social respon-
sibility, has the capability of conforming to the conditions of the changing world and enjoys to the end of
one's life the results of the combinations produced by changing the subject content.
2.0 National goals

1. The achievement of a functioning sense of National Cohesion, National Integrity and
National Unity
2. The establishment of a pervasive pattern of Social Justice and active elimination of inequities.
3. The evolution of a Sustainable Pattern of living - A sustainable Life Style.
4. Seeking a livelihood and work opportunities that are, at one and the same time, productive and give
avenues of self – fulfilment
5. Participation in human resource development that will support socio- economic growth of the country.
6. Involvement in nation building activities: learning to care.
7. Cultivation of an element of adaptability to change - learn to learn and adapt, developing competence
to guide change.
8. Coping with the complex and the unforeseen; and achieve a sense of security and stability
9. Securing and honourable place in the international community
(ii.) Competencies relating to the Personality Development

- Generic skills such as creativity, divergent thinking, initiative, decision making, problem-solving,
critical and analytical thinking, team work, inter-personal relationships, discovering and exploring
- Values such as integrity, tolerance and respect for human dignity.
- Cognition
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3.0 Basic Competencies
The following competencies promoted through education will help to achieve the above mentioned National
Goals.
(i.) Competencies in Communication

This first set of competencies is made up of four subsets - Literacy, Numeracy, Graphics and
information communication skills :
Literacy : Carefully listening, Speaking clearly, Reading for comprehension, writing
clearly and accurately.
Numeracy : Using numbers to count, calculate, code and to measure, matter, space and
time.
Graphics : Making sense of line and form, expressing and recording essential data,
instructions and ideas with line, form, colour, two and three-dimensional
configurations, graphic symbols and icons
ICT Competencies: Knowledge on computers, and the ability to use the information
technology skills at learning or work as well as in the private life
(ii.) Competencies relating to the Personality Development

- Generic skills such as creativity, divergent thinking, initiative, decision making, problem-solving,
critical and analytical thinking, team work, inter-personal relationships, discovering and exploring
- Values such as integrity, tolerance and respect for human dignity.
- Cognition
(iii.) Competencies related to the Environment.

This is the second set of competencies related to the Social, Biological and Physical Environments.
Social Environment: Awareness, sensitivity and skills linked to being a member of multi cultural
plural society, social relationship, personal conduct, general and
national heritage, legal conventions, rights, responsibilities, duties and
obligations.
Biological Environment: Awareness, sensitivity and skills linked to the living
world, man and the ecosystem, trees, forests, seas, water, air and life
- plant, animal and human life.
Physical Environment: Awareness, sensitivity and skills related to space,
energy, fuels, matter, materials and their links to human living, food,
clothing, shelter, health, comfort, respiration, sleep, relaxation, rest,
wastes and excretion, media of communication and transport.
Included here are the skills in the use of tools to shape and
materials for living and learning.
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(iv.) Competencies related to Preparation for the world of work
Employment related skills to maximize their potential and to enhance
their capacity to contribute to economic development; to discover
their vocational interests and aptitudes; to choose a job that suits their
abilities and; to engage in a rewarding and sustainable livelihood
(v.) Competencies related to religion and ethics

This fourth set of competencies are laden with values and attitudes. It
is essential for individuals to assimilate values, so that they may function
in a manner consistent with the ethical, moral and religious modes of
conduct, rituals and practices in everyday living, selecting the most
appropriate.
(vi.) Competencies in Play and Use of Leisure

Competencies that link up with pleasure, joy, emotions and such
human motivations. These find expression in play, sports, athletics
and leisure pursuit of many types. These also link up with such values
as cooperation, team work, healthy competition in life and work.
Included here are such activities that are involved in aesthetics, arts,
drama, literature, exploratory research and other creative modes in
human living.
(vii.) Competencies related to ‘Learning to learn’.

These competencies flow directly from the nature of a rapidly
changing, complex and interdependent world. Whatever one
learns, that learning will need updating and review. This requires
that one should be aware of, sensitive and skilful in sustained
attention, and be willing to persevere and attend to details that
matter in a given situation.
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4.0 Aims of the subject
(1) To Inquire the nature of businesses.

(2) Inculcate a desire for investment.
(3) Record and post business transaction.
(4) Prepare the financial statement of a business.
(5) Acquire basic ability regarding electronic commerce and accounting.
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ix
7.0 Competency, Competency Level, Contents, Learning outcomes and No. of Periods Grade 10
Competency Competency Levels Contents Learning outcomes Periods

1.0 Enters the • Defines the concept of business with 10
Business 1.1 Constructs the basic foun- • The concept of business.
dation of business. • Aims of business. knowledge and awareness.
world with • Indicates the aim of busines. 05
• Consumer needs and wants
knowledge • Explains how businesses fulfill consumer
• Businesses that produce goods.
and aware- needs and wants.
• Businesses that produce services.
ness. • Provides examples of businesses that
• Factors of production.
produce goods and businesses that provide
services.
• Indicates the importance of factors of •
producton. •
xi
• Names the stakeholders in a business. 05

1.2 Constructs the basic • Stakeholders in business. • Explains the aim of different stakeholder
foundation to meet the • The aim of different stakeholder groups.
aim of stakeholders in the groups.
business.
B.S.Sy.EN.(FIN)
2.0 Takes 2.1 Constructs the basic
action to sys- foundation to ensure the • Factors of the Business Environment
tematize effectiveness of the rules • • Lists the External and internal factors of the 10
Government influence.
business ac- and regulations of the • Government rules and regulations. business environment.
tivitiesincon- state on business. • Gives a simple explanation of the influence 04
formity with of the government on business.
the Business • Presents government rules and regulations
environment. over businesses.
• Explains how business activities become
efficient through the influence of the •
government and rules and regulations. •
2.2 Constructs the basic

xii
foundation to ensure the • Impact of the economic environment

effectiveness of the tech- on business. • Presents the impact of the technological and
nological and economic • Impact of the Technological economic environment on business.
environment on business. environment on business. • Shows how business activities can be carried 03
out efficiently through the influence of the
technological and economic environment.
2.3 Constructs the basic

foundation to ensure • Globalization • Presents the impact of globalization on
effectiveness of globaliza- • Impact of globalization on business business.
tion on business. • Explains how business activities can be 03
carried out efficiently through the influence
of globalization..
B.S.Sy.EN.(FIN)
3.0 Constructs 3.1 By inquiring into types

the basic of business organizations
foundation derives the basic ability • Classification of business or ganizations. • Lists different types of business organizations 10
to select an of selecting a suitable • Basic characteristics of each business and describes their main features.
• Sole trader business • Lists the advantages and disadvantages of 04
appropirate business organization.
• Partnerships sole trader business, partnerships,
business • Incorporated company Incorporated company, co-operative
through the • Co-operative organizations and non profit making
analysis of • Non-profit making organisation.
organisation.
types of • State institutions and •
• Discusses the advantages and disadvantages
business departments. •
of state institutions and departments.
and the
basic 3.2 Selects an appropriate
features of business organization. • According to the aim of the business.
• Shows how an appropriate business
business. • According to scale of the business.
xiii
organization based on aim, is selected. 03

• According to Management of the
• Shows how an appropriate business based
business. on scale, is selected.
• Shows how an appropriate business
organization based on management is
selected.
B.S.Sy.EN.(FIN)
3.3 Follows procedures to • Compelets documents in registration of a

register a sole trader • 03
Steps to be followed in registration sole trader business .
business. • Initial documents • Provides guidelines to related individuals to
• Advantages of a registration of a register sole trader business .
business • Shows the advantages and disadvantages of
registration of a sole trader business.
•
xiv
4.0 R e c o r d s 4.1 Presents business trans- •

• Explains accounting. 20
business actions through the • Accounting
• Shows the aims and importance of
transactions. accounting equation. • Aim and importance of accounting.
• Business transactions accounting.
• Explains business transactions and presents 10
• Different types of business
transactions. examples.
• Presents business transactions related to
• Assets, liabilities, income, expenses
and equity are generated through assets, liabilities, income, expenses and
business transactions. equity.
• Presents the accounting equation and
• Basis of the accounting equation
• Accounting equation describes its basic components.
• Develops the accounting equation where
• Assets
• Liabilities there are no external liabilities.
• Develops the accounting equation where
• Equity
• Constructs accounting equation. there are external liabilities.
• Explains through examples situations where
• Without external liabilities
• With external liabilities equity changes.
• Instances where changes take place
B.S.Sy.EN.(FIN)
in equity
• Introduction of additional capital
• Drawings
• Income
• Expenses
•
•
xv
4.2 Records the dual • Dual aspect of business transactions.

aspect of transactions • Double entry system. • States dual aspects of business transactions.
according to the • Ledger account and its format. • Presents double entry system.
double entry system. • Double entries of business • Names types of ledger accounts. 10
transactions. • Posts business transactions into the ledger.
• Debit
• Credit
• Types of ledger accounts
• Asset
• Liability
• Income
• Expense
• Equity
B.S.Sy.EN.(FIN)
5.0 Records • Prime entry books and their 40

business 5.1 Records business trans- importance.
transactions actions in cash in the • Source documents
• Names the primary books and explains their
in prime en- cash book. • Cash book and its importance. 05
importance.
try books and • Recording the business transactions in
• Shows the need for prime entry books.
transfers to the cash book.
• Explains its importance of source documents
the ledger ac- • Cash receipts
• Names source documents relevant to each
counts. • Cash payments
prime entry book. •
• Cash balance
• Describes cash book and shows its need. •
• Dual function of the cash book.
•
xvi
Records transactions in the cash book.

• Explains the dual functions of the cash book.
• Posts the business transactions to the ledgers
from the cash book.
• Source documents 04
5.2 Records business • Explains the source documents related to
• Recording of transactions
transactions in the bank transactions.
• Cash deposits
bank account. • Records cash deposits, cheque deposits and
• Cheque deposits
issue of cheques.
• Issue of cheques
• Shows causes for the dishonour of cheques
• Dishonoured cheques and related accounting entries.
• Bank overdraft • Computes the bank balance.
• Explains bank overdraft.
B.S.Sy.EN.(FIN)
5.3 Prepares the bank • Bank statement • Describes the reasons for the difference in
• The balance in the bank account the balances in bank account and bank 05
reconcilition
statement. and the bank statement may statement.
differ. • Adjusts balance in bank account.
• Causes for the difference in bank • Prepares bank reconciliation statement
balances. based on the adjusted favourable balance
• Issued but cheques not in bank account.
presented to the bank.
• Deposited but unrealised
cheques. •
•
xvii
• Bank charges
• Payments made by the bank
according to standing order
• Direct deposits
• Adjusts the balance in the bank
account.
• Prepares the bank reconciliation
statement based on adjusted
favourable balance of the bank
account.
5.4 Records transac- • Describes cash discounts

• Cash discount. 03
tions related to cash • Discount allowed • Names the source documents for cash
discounts in the • Discount received discounts.
cash book. • Source documents. • Records the transactions related to
• Recording of transactions with
discounts. discounts in the cash book.
• Post transactions into the ledger • Posts transactions into the ledgers.
B.S.Sy.EN.(FIN)
5.5 Uses petty cash book to • Importance of the petty cash book. • Shows petty cash transactions.
record petty cash trans- • Petty cash transactions • Names source documents for petty cash
actions. • Source documents 03
transactions.
• Petty cash imprest system • Explains the petty cash imprest
• Petty cash book with analysis • Records transactions in the petty cash book
columns. with analysis columns and computes the
• Records transactions. closing balance.
• Receiving petty cash imprest from
• Shows the reimbursement of petty cash.
the main cashier. • Posts transactions to the ledger from the
• Recording petty cash payments. •
petty cash book •
• Compute balance in petty cash
xviii
book.
• Reimbursment of petty cash
imprest.
• Post into the ledger.
• Explains importance of purchase journal.

• Purchase journal • Names the source document relating to
5.6 Prepares purchases
• Source document purchase journal.
journal. 03
• Recording • Records transactions in the purchase journal.
• Post into the ledger • Posts transactions to the ledger from the
purchase journal.
B.S.Sy.EN.(FIN)
• Explains the importance of sales journal
5.7 Prepares sales journal. • Sales journal • Names the source documents for the sales 03
• Source document journal.
• Recording • Records transactions in the sales journal.
• Transfers to the ledger • Posts transactions to the ledger.
5.8 Maintains the general • Explains the importance of the general journal. 03
• General journal
journal. • Names the source documens related to the
• Source documents general journal.
• Types of entries • Names the transactions recorded in the •
• Adjusting entries general journal. •
xix
• Entries for Rectifying errors
5.9 Balances ledger accounts • Transfers transactions from the prime • Transfers the transactions recorded in the 03
entry books to the ledger. prime entry books to the ledger.
and prepares trial bal-
• Balance ledger accounts • Balances the ledger accounts.
ance.
• Prepares trial balance • Prepares the trial balance.
5.10 Rectifies errors that • Errors that may occur when recording
occur in recording trans- transactions. • Lists out the errors which may occur when
actions in prime entry • Errors which do not affect recording the transactions in prime entry 06
books and posting to led- agreement with the trial balance books.
ger accounts and rectification of such errors. • Lists out the errors which may occur when
• Errors which affect the agreement posting the transctions in the ledger.
of the trial balance and rectification • Identifies and corrects the errors that do not
of such errors through suspense influence agreement of the trial balance.
account. • Identifies suspense accounts.
• Rectifies errors through the suspense
account
B.S.Sy.EN.(FIN)
5.11 Use technology for • Transactions using electronic • Explains the advantages of the mobile 02
speedy conduct of cash equipment. phone for cash transactions.
transactions and to • Business transactions based on mobile • Provides examples of the use of the mobile
elicit responses. phones. phones for business transactions.
• Business transactions based on • Shows the advantages of the usage of
computers. electronic equipment on business
• Advantages of transactions using transactions .
electronic equipment. •
• Quick cash transactions •
xx
• Payments of bills
• Short message service
• Immediate responses-necessary
equipments close to client.
90
B.S.Sy.EN.(FIN)
Guidance to the Learning-teaching process
1
Competency 1 : Enters the Business World with awareness.
Competency Level 1.1 : Builds up the basic foundation relevant to business.
No. of Periods : 05
Specific Learning Outcomes :

By the end of this activity the student should be able to achieve the following learning
outcomes.
• Explains Business Concept.
• States Aims and Objectives of the Business .
• Explains how consumer needs and wants are met by businesses.
• Gives examples of Businesses that produce goods and services.
• Shows the need for factors of production.
Instructions for lesson planning:
Basic terms and concepts
Business
Institutions or organizations involved in the production or distribution of goods and services are
called businesses. Businesses are especially involved in activities related to the production or
distribution of goods and services necessary for man. The main aim of a business is making a
'profit'. Yet there are certain businesses that are carried out without the aim of profit making.
Expecially, businessess in the State sector are at times run more with the objective of providing
services than making profits. Businesses of the present times are very much broader than the
business of the past. While business transactions can be conducted through the electronic
medium, there is also the facility of carrying out transactions from any point in the world.
Aims and Objectives of the Business

• Realization of an adequate profit for the owners of profit -oriented businesses.
• Satisfaction of changing consumer needs.
• Generation of employment etc.
Needs
Things that man should necessarily satisfy in order to exist, are human needs.
eg.: Food, clothings, shelter, health and education .................... etc.
Wants
Various forms of meeting needs is wants.
eg.
Food : Rice, gram, bread, buns, green-gram, tea
Clothing : Sarees, trousers, dresses.
Education : Teacher service, State schools, Examinations, Libraries.
2
It is necessary to generate various poducts and services arising from needs. The task of
production is implemented by businesses. This production of business goods can be classified
as production businesses and services business.
Eg.
Businesses that produce goods
Tyre production
Bakery production
Fabric production
Businesses that produce services
• Salons • Tailorshops
• Post offices • Banks
• Garages • Hospitals • Groceries
Factors of productions
Land : Land, natural resources

Labour : Employees, Managers
Capital : Money, Machines, Buildings
Enterpreneurship: Owners,
Instructions for activity planning
Direct the students to study the picture below, instruct them to answer the questions asked.
3
4
Questions
1. Name the locations seen in the picture.

2. Show the tasks performed by them.
3. What uses can you make of them.
4. Suggest a name for the places that supply the goods and services necessary for you to exist,
shown on the picture.
5. Classify the business organizations in the picture as service businesses and businesses pro-
ducing goods.
6. What are the resources necessary to start these production businesses.
7. Give the reasons that form the basis for the commencement of such businesses.
8. Present your views on the businesses operating in your area.
Quality Inputs
1. Business and Accounting Studies Text book for grade 10 - Lesson One - Basis of Business.
Criteria for Assessment and Evaluation
1. Explains Business Concept so as to include the terms, aims of businesses and economic
activities.
2. States the difference between needs and wants, based on examples.
3. Provision of five examples of goods producing businesses and service businesses.
4. Divides resources like land, machinery, buildings, money, owners, workers, air, light, neces-
sary to carry out the business, separately under factors of production .
5. Collects information relevant to the aim, based on the picture.
6. Acquires the ability to make presentations.
5
Competency 1 : Enters the Business World with awareness.
Competency Level 1.2 : Lays the basic foundation for the satisfaction of the aims of
parties that have an interest in Business.
No. of Periods : 04

outcomes.
• Names parties that have an intrest in the Business.
• Explains the aims of each party that have an interest in the Business.
Different parties that evince an interest in business activities are called parties that have an
interest in the Business.
• Owner/Owners
• Managers
• Workers
• Lending organizations/Individuals
• Consumers
• Banks and Financial organizations
• The state
• Community / People
• Stake holders in the business
It is with the expectation of satisfying the aims of each party, that these parties show an interest
in businesses.
Parties Aims
1. Owner • Inquiring whether an adequate profit has been made, and
• Whether prestige has been acquired.
2. Manager • To inquire whether management activities have been successful

and
• Whether managerial decisions can be implemented.
3. Workers • To inquire whether one's employment is secure and

• Whether a reasonable wage could earned.
4. Customers • Can quality goods and services be obtained?

• Can goods and services be obtained easily and expeditiously?
• Reasonable price
6
5. Suppliers • Obtaining a proper payment for the goods one supplies.
6. Lending organizations • Can the loan given be recovered?

• Can further loans be given?
7. Banks and Financial • Associating as a party dealing with one's organization

Institutions • Supply of loans and other services.
8. The State • Are businesses conducted so as to ensure the security of

customers?
• Are rates payable to the State paid appropriately.
9. People • Focussing attention on the service rendered to society

by the business.
• Focussing attention on the internal affairs of the business
Instructions for activity planning :
Write separately on cards or strips of white paper, those parties that have an interest in the
business their aims and
separately, an adequate number to match the number of students in the class.
Example : Prepare word cards as below.
Owner Banks Owner
Getting the individual to Has a reputation been established?

join the Bank as a customer
Has a reputation been established? Owner Banks
Prepare an adequate number of cards.
• Several strips can be prepared for a party.

• Mix these strips of paper and put them in a box.
• Provide these strips to students as desirable.
• Instruct those students with cards with parties who have an interest in the business to meet the
students with cards bearing the relevant aims.
• Find out whether this meeting is correct and get the students to note it down as subject matter.
• In this manner, direct the students to note the information in the other cards.
• Investigate whether correct notes have been made in relation to "parties that have an interest
in the Business..
7
• You can implement the game above appropriately so as to match parties that have an interest
in the business and their "aims".
• Prepare an exercise where students have to complete a table by matching parties that have an
interest in the business and their Aims by drawing lines or filling in blanks.
• Name a school/hospital/co-operative/business organization and direct the students to list out
the parties that have an interest in the organisation and the relevant aims.
Quality inputs:
• Business and Accounting Studies Text book for grade 10 lesson one, Basis of Business.

1. Names parties that have an interest in the business , with examples.
2. Presents, with examples the aims of parties that have an interest in the business .
3. Names one organization and names the parties that have an interest in the
organization for same
4 Discusses with others and accesses information one requires.
8
Competency 2 : Adopts to changes in the Business Environment and
implements business activities.
Competency Level 2.1 : Takes action to implement Business Activities in accordance

with the influence of the State as well as Laws and Regulations.
No. of Periods : 02
Specific Learning Outcomes:

outcomes.
• Delineates factors in the Business Environment.
• Presents Government Rules and Regulations relevant to Business.
• Explains how Business activities are made efficient through State influence and Rules and
Regulations.
Introduction to the Business Environment :

The environment that contains the various factors that are subject to influence in the process of
the implementation of Business activities is called the Business Environment. The Business
Environment can be presented in terms of the Internal Environment and the External Environ-
ment.
Business Environment
Internal Environmental Factors External Environmental Factors
Owners State influence and Rules and Regulations

Workers Technical Environment
Managers Economic Environment
Global Environment
State influence and Rules and Regulations

Here, influence is brought about upon business according to the manner in which the State
intervenes in businesses. That is
• Provision of infrastructural facilities (electricity, road ways, water)
• Ensuring consumer security.
• Registration of a business and provision of a license.
• Taking action for worker security
(deciding on salaries, service period, decisions on leave etc.)
9
Restrictions on taking action according to one's descretion are placed upon properioters/owners
as a result of State influence and rules and regulations. On the other hand the opportunity is
provided for the improvement of one's business as a result of the provision of various facilities by
the State.
eg. : The provision of facilities like roadways and electricity makes it possible to make busi-
nesses effective and efficient.
The Act on the Consumer Protection Authority has been introduced in order to ensure the safety
of consumers. eg." If a businessman fraudulently misleads a consumer, Court action is taken
under this Act.

• Provide subject matter through the use of a textbook or through the open book examination.
• In this regard, get the students to make a thorough study of the relevant topics in the text
book.
• Divide the class into two groups and provide each group one of the topics below, selected at
random, and get each group to prepare a questionnaire on the topic assignment to one's
group.
• Classification of Business Environment.
• Legal and Political Environment.
• Make arrangements for each group to assemble information through an exploratory process.
• Instruct the students to verify the information provided by you against the information derived
from the text.
• Examine whether the answers provided by the students are correct and provide feedback to
weak students and feed forward to the rest.
• Prepare a wall paper article to cover subject matter and learning outcomes and exhibit same.
Quality Inputs
• Business and Accounting Studies Text book for grade 10 - Lesson two - Business
Environment.

1. Shows Business Environment factors.
2. States the State Rules and Regulations that affect business.
3. Explains, based on examples, how State Rules ad Regulations affect efficient implementation
of business activities.
4. Accesses necessary information through self study.
10
Competency Level 2.2 : Takes action based on the influence of the technological and
economic environment to make business activities efficient.
No. of Periods : 02

outcomes.
• Presents the influence of the technological and economic environment.
• Explains how business activities can be made efficient based on the influence of the
technogical environment and the influence of the economic environment.
Introduction to the Economic Environment :

The Economic Environment is the environment that includes inflation, interest rates, salaries,
income, savings, investments, tax percentages, exchange rates etc. that lend themselves in influ-
encing the implementation of business activities.
Introducing the Technological Environment
The environment comprising the technological implements that influence the implementation of
Business activities like modern technological tools, machinery, modern methodologies, new
inventions etc. is called the Technological Environment.
Influences brought upon Business because of Economic and Technlogical Environmental

Factors.
Variable of the Influence

Environmental Factor
• Economic Environment • Motivation for businesses to obtain loans

Interest ratio because of the reduction of rates of interest.
Using this situation for the development of
businesses.
• Change in the costs of goods • Increase in expenses as a result of increase in
and services. cost. Then action is taken to control prices.
• Levy of a tax on goods. • Expenses in businesses can increase as a result of
the imposition of taxes on goods.
11
Technological Environment
• Invention of modern machinery and • Possibility of greater production.
their use. • Made of high quality products.
• Development of the field of transport • Possibility of pursuing maximum profits
• Development of communication • Time saving
technology • Security of quality
• Use of production methods • Possibility of speedy access.
• Attract consumers.
• Increase in trade
Similar beneficial influences as well as
adverse influences are possible.

• Write out on separate cards variables that belong to Economic and Technological Environ-
mental Factors and distribute them among the students.
e.g. Increasing wages Computer used in the business being outdated
Use of production methods
• Direct students to study the text book.

• Instruct students to write on the back of the card itself, in the card or in their exercises book
the influence of the variable given in it, on the business.
• Discuss the answers written by the students, correct where necessary and provide same as a
note.
• Prepare several question of the type given below and instruct the students provide answers.
• It has been decided to raise the bank interest rate by 2% from 2013. As a result, the most
correct answer showing the influence of the above on business is
1. Businesses being motivated to take loans.
2. Businesses will deposit their money in banks.
3. Businesses will restrict taking loans.
4. Selling price of goods and services will go up.
• Provide an example of a methodology that can be employed for the distribution of products
from crop lands to the market.
Quality Inputs
• Business and Accounting Studies Text book for grade 10 Lesson two - Business
Environment.

1. Describes influence of technological environment.
2. Describes influence of the economic environment.
3. Provision of five examples of the influences of the technological environment.
4. Provision of five examples of the influences of the economic environment.
5. Accesses new information through study.
12
Competency Level 2.3 : Takes action to implement Business Activities in accordance

with the influence of Globalization.
No. of Periods : 02

outcomes.
• Presents the influence of Globalization in a simple manner.
• Explains how business is made efficient based on the influence of Globalization.
Instructions for lesson planning :
Introduction to the Globalization :
Removal of restrictions and obstacles that exist between the various countries of the world and
functioning as a single village. As such the world is considered a universal village. The world
functions as a universal village on account of the progress in communication and transport tech-
nology.
Influence to Globalization
There have been favourable as well as adverse influences in the implementation of business activities
as a consequence of changes in Information and Communication technology.
eg.: • Local businesses improving as a result of goods and services of internationally

reputed institutions entering local markets.
• Their having an impact on manufacturing institutions implemented locally.
Instructios for activity planning :

• Call upon a resource peron and let him discuss regarding the following matters.
• Introduction to the global environment.
• Indentifying markets for business goods and services.
• How ordering, purchasing and selling takes place freely.
• Making payments.
• Direct the speaker to explain about how local small-scale businesses are affected in relation
to the global environment.
• At the close of that lecture discuss same with the students and provide them a short note to
develop learning outcomes
13
Quality Inputs
• Business and Accounting Studies Text book for grade 10 - Lesson two -
Business Environment

1. Explains globalization through examples.
2. Shows the influence brought upon businesses by global environmental factors.
3. Explains, based on examples, the possible influence on the manufacturing
businesses because of the global environment.
4. Shows, with examples, the adverse as well as beneficial influence of globalization on
businesses.
.
14
Competency 3 : Inquires about types of business organizations and basic
information regarding them and prepares facilities for the
selection of businesses suited for one.
Competency Level 3.1 : Inquires about types of business organizations and derives the
basic ability to select suitable businesses.
No. of Periods : 04

outcomes.
• Delineates various types of business organizations.

• Discusses the advantages and disadvantages of sole trader.
• Discusses the advantages and disadvantages of a partnership.
• Discusses the advantages and disadvantages of a Incorporated company.
• Discusses the advantages and disadvantages of a co-operative.
• Discusses the advantages and disadvantages of non-profit making organizations.
• Discusses the advantages and disadvantages of government institutions.
Sole trader:
Business where the ownership is of a single individual is called a sole trader.
Special features of a Advantages Disadvantages
sole trader
1. Investment of capital by 1. Ability to commence 1. There is unlimited responsibility.
owner. easily.
2. Applicable rules and 2. Self control. 2. There exists the difficulty of
regulations, minimal. finding capital.
3. Enjoy profits on one's own.3. All profits acruing to 3. Absence of going concern.
the owner.
4. Responsibility of owner, 4. Maintenance of 4. Absence of legal individuality
limitless. confidentiality of of business.
business information.
5. Absence of legal 5. Commitment 5. Personal decisions taken by
individuality. owner failing at times.
6. Absence of criteria for 6. Administrative decisions
establishment. taken personally.
7. Absence of going concern. 7. Exploys one's skills
to the maximum.
8. Registration not being
compulsory.
9. Ability to take independant
decisions.
15
Partnership :
The relationship that exists between those who conduct a business in common with the aim of
making a profit is partnerships (common businesses conducted between two or more individuals
with the aim of earning profits are joint businesses).
Special features of Advantages Disadvantages

partnerships
1. Minimum number of 1. Can be easily started. 1. Responsibility being unlimited.
share holders 2.
Maximum number 20.
2. Capital is invested by the 2. Considerably a big 2. Profit shared among
partners capital can be collected. several partners.
3. There should be an 3. The skills of the partners 3. Absence of continuous
agreement among the can be made use of the existence.
partners.
4. The liability is unlimited. 4. The liability is shared 4. Possibility of conflicts
among the partners. or disputes.
5. Registration is not 5. Ability of collective 5. Absence of a legal status.
compulsory. decision making.
6. Absence of legal status.
7. Continuous
existence not ensured
Partnership agreement :
A partnership agreement or deed is a document prepared in accordance with the agreement
among the relevant partners/parties.
Incorporated company:
A Incorporated is an organizations set up under the Companies Act. No. 07 of 2007
with a continuous existence, separate from the owners who invest capital in the business.
Significant features of Advantages Disadvantages

Incorporated company
1. Open under the companies 1. A large amount of capital 1. There can be more and more
Act. can be accumulated. legal interferences.
2. Having a continuous 2. Gaining legitmacy. 2. Difficult to dissolve.
existence.
3. Gaining a legal status 3. Running continuously. 3. Separate administration.
(Legality)
4. Liability is limited. 4. Limited liability. 4. Need to Pay taxes.
5. Introduce capital by 5. Comparatively higher
shares. acceptation.
16
Co-operative Societies:
A private sector business organization carried out for the wellbeing of the members and
registered under the co-operatives Act.

Cooperative Societies
1. There existing a 1. Democratic control. 1. Financing sources are
democratic control. restricted.
2. Open and volunteer 2. Essential goods and 2. Should be controlled only
membership. services are provided on coorporative policies.
at a reasonable price.
3. There is collective 3. Business activities in 3. Frequent political interferences.
ownership of the various fields can be
membership. carried out.
4. Consists of general 4. Acting with mutual

purposes and needs. coorporation.
Non-profit making Organizations:

The organizations which are set up by the members for the betterment of the members them-
selves as well as for social welfare without profit making aim are called Non-profit making
Organizations .
i.e.1. Funeral Assistance .

2. Sport clubs
3. Charities
State Corperations and Departments:

Institutes, which have been established under special Parliamentary Acts and are owned by the
State are called State Corperations.
i.e.1. Building Materials Coperation.

2. Sri Lanka Broadcasting Corperation.
3. Coconut Development Board.
4. Sri Lanka Ports Authority.
17
Special features of Advantages Disadvantages
State Cooperation
1. Ownership and control is 1. More suitable for the 1. Most probably these are
possessed by the State. provision of essential being carried out under
services. severe loss.
2. With the purpose of 2. The basic purpose is 2. There are administrative
providing common social wellbeing. problems due to
services. inefficient control.
3. Liability also lies with 3. Political interferences
the State. being greater.
4. Gaining legality. 4. Difficult to establish.
5. Registration is essential.
6. Continuous existence.
Departments:
Departments are institutions which are completely under State control, established under a
specific Parliamentary Act.
i.e.1. Department of Examinations
2. Department of Agriculture.
3. Department of Education.
4. Department of Posts.
5. Department of Railway Services.

Departments
• Ownership and control is •. Ability of providing •. Control difficult'
by the state. essential services to the • More rules and regulations
general public. implemented.
• Liability of the state is • Ability to provide large • Inability to set up easily.
unlimited. scale services. • Most probably making a
loss.
• Registration is compulsory. • State employees • A large number of workers
• Having a continuous working. employed.
existence. • All equally treated.
• Absence of legality.
18
Assign the students to learn the lesson about the various business organizations in the class
text.
• Sole trader businesses.
• Partnership businesses.
• Private limited companies.
• Co-operative societies.
• State corporations and departments.
• Distribute these topics among groups of students at random.

• Get them to fill in the work sheet given by the teacher by refering to the text book.
Work Sheet
...................................... Business
1. Give an introduction to the topic above.

2. List out the initial features of this Business.
3. State 3 advantages and 2 disadvantages of this business.
4. Present the information you collected in an appropriate manner, before the class.
• After assuring the accuracy of the details presented by the students instruct them to build up
appropriate notes for this lesson.
• Complete the following table.
Sole Trade Partnership Incorporated Corperative State Corperation

Business Company & Society State Department
1. Owner
2. Control
3. Existence
4. Liability
5. Legality
6. Registration
7. Capitalising
8. Advantages
1.
2.
9. Disadvantages
1.
2.
19
Quality Inputs
• Business and Accounting Studies Text book for grade 10 - Lesson Three - Business
Organisations.
• Gives the differences between a retail outlet in your area and a corperative society.
• Names the significant features of sole trade business, partnership business and Incorporated
company.
• Lists out the significant sectors of co-operative societies.
• Lists out the significant features of state coperations and departments.
• Compares the significant features in each type of business.
• Provides relevant information through the work sheet.
20
Competency Level 3.2 : Gains the fundamental skills of selecting an appropriate

Business Organization.
No. of Periods : 02

outcomes.
• Shows how to choose a business in accordance with aim.
• Shows how to choose a business on its scale.
• Shows how to choose a business on management.
There are two aims in choosing a business organization.

1. Profit earning objective.
ex. Retail trade business.
2. Social welfare objective.
ex. • Village Welfare Society.
• Buddhist Association.
• Funeral Aid Society.
• The business organization to be opened may be small scale or large scale according to the
nature of the business, the desire of the business man and quantity of resources that could be
collected by the owners. A person who has the intention of opening a sole proprietorship
business, does not need a large quantity of resources. Even though a business is opened
small scale, it can be gradually promoted to a large scale business.
The management of the business can be handled by the owner himself or by several persons.
Accordingly one can decide by himself the business which one is to be chosen.
(Choosing a state sector businesses is not negotiated hereby).

Call upon one or a few selected business men in your area and let the students discuss with
him/them regarding the following matters.
• The nature of their business.
• The business desire.
21
• Name of the business.
• The place where business is located.
• Aim of opening the business.
• The initial capacity and the current capacity of the business.
• The way in which the business was controlled at the beginning and the way in which it is
controlled at the moment.
• Provide a work sheet similiar to the following to the students after the discussion and derive
the following facts.
Work sheet
• There is a chance for you to open a business.
1. Name the business to be opened by you.
2. Name the aim of your business.
3. State whether it is a small scale or a large scale business, with fair reasons.
4. Explain how your business is expected to be controlled.
5. Make a clarification adjusting the facts recalled from the work sheet with the expected
subject matter.
Quality Inputs
Organisations.

1. Lists out the facts considered, when a business organization is chosen.
2. Presents the aim based on which a business organization is chosen.
3. Presents 3 reasons for choosing a small scale business.
4. Presents the method of controlling each of the following business oeganizations.
• Sole proprietership.
• Partnership business.
• Incorporated company.
• Co-operative societies.
• Societies (Welfare).
22
Competency Level 3.3 : Follows the steps in the registration of a sole proprietorship
business.
No. of Periods : 02

outcomes.
• Provides instance for various types of businesses that could be opened as sole
proprietorship business.
• Fills in the documents needed in opening a sole proprietorship business.
• Instructs the parties with the need of registerring a sole proprietorship business.
• Points out the uses of a sole proprietorship business being registered.

Steps to be followed in a sole proprietorship Business being Registered.
1. Obtaining the relevant application form from the divisional secretariat producing one's
National Identity Card.
2. Filling in of the application form.
3. Producing the completed application to the divisional secretariat.
4. If the required qualifications have been fulfilled the business registration certificate is issued
by the divisional Secretary.

• Distribute a photocopy of an application form for Registering a sole proprietorship business
among the students and point out the details in it.
• State that the business registration certificate should be obtained from the the completed
application produced form, if the required qualifiations are fulfilled.
• If the resources/facilities permit, plan to summon an officer from the divisional secretariat to
the classroom and let him explain this practical procedure to the students.
• Make the students list out the steps to be followed in getting a sole proprietorship business
registered after the relevant application form was filled.
Uses of Registration
• Getting approval for the business.
• Getting legal acceptance for the business.
• Easy to obtain a bank loan when necessary.
23
Quality Inputs
Organisations.
Critetia for Assessment and Evaluation

• Presents instances of business opportunities that could be begun as sole proprietorship
businesses.
• Lists out the steps to be followed in getting a sole proprietorship business registered.
• Presents the uses of registering a sole proprietorship business.
• States the businesses which are expected to be begun on one's own.
24
Competency 4 : Records transactions of a business.
Competency Level 4.1 : Presents transactions of a Business based on the Accounting

Equation.
No. of Periods : 10

outcomes.
• Explains Accounting.
• Presents aims and the need of Accounting.
• Explains business transactions and presents examples.
• Present transactions where assets, liabilities, income expenses and equity are highlighted.
• Presents the Accounting Equation in a situation where external liability is absent.
• Explains, based on examples, situations where equity change.
Accounting
• Accounting is recording the transactions of a business measurable in terms of money in
account books, their classification, preparation of financial reports and the provision of
information to parties who need them.
Aim of Accounting
• The main aim of Accounting is the preparation of useful information for parties displaying a
liking for business to take decisions.
Necessity of Accounting
1. Maintenance of the limited resources of a business subject to control.
2. By noting down the transactions of business, oversights and delays can be minimized.
3. Measurement of profit-loss situation and financial/situation of the business.
4. Implementation of legal requirements like payment of income tax.
5. Planning and maintenance of future business activities.
Business Transactions
• Basically business transactions take place for cash or on credit.
• In cash transactions, either cash is received or paid when the transaction occurs.
eg.• Purchase of a consignment of goods for Rs. 15,000 to be resold.
This is a cash transaction.
• Purchase of a stock of goods for Rs. 50,000 from Asiri Traders with the promise of
repaying after one month. This is a credit transaction.
• In business assets, liabilities, income, expenses and equity arise as a result of the transactions
taking place in a business.
25
Assets
Resources that result from the transactions of a business, gain economic profits to the busi-
ness and are managed by the business, are assets.
eg.The buildings, motor vehicles, stocks of goods, cash etc.
Liabilities
Debts payable by the business to external parties are liabilities.
eg. A loan of Rs. 50000 taken by A for his business.
Equity
Equity is the amount of a business owned out of its assets by the owner. Equity is derived by
subtracting the total liabilities from the total assets of the business.
eg. "A" starts a business investing Rs. 100,000. Here the equity of 'A' or his capital is
Rs. 100,000.
Income
Earnings from the operational activities of the business is Income.
eg.In A's business.
Cash down sales Rs. 70,000
Credit sales Rs. 50,000
Expenses
Resources that contribute to earning income in the operational activities of the business are
called expenses.
eg.Exployee salaries Rs. 4,000
Insurance costs Rs. 1,000
Transport expenses Rs. ,500
Influence on Business Transactions on assets, liabilities, income, expenses and equity.

eg. 01. • Opening up of a business by Sapumal Bandara on 2013.03.31 investing Rs. 200,000.
• arise an "Equity" through the investment of Rs. 200,000 for the
commencement of the business (The total capital)
• Along with the receipt of cash Rs. 200,000 for the business. This is its "Assets".
eg. 02. • Purchase on credit, goods for cash Rs. 50,000 from Chathusi Traders on 2013.3.2
for resale.
• The stock of goods purchased for same are the 'Assets' of the business.
• The sum of Rs. 50,000 payable to Chathusi Traders are Liabilities.
26
Accounting Equation
There is a dual affect on the transactions measurable in terms of money, taking place in a
business. An equation can be built to record this dual affect. This is the Accounting Equation.
Components of the Accounting Equation.

1. Assets
2. Liabilities
3. Equity
Building up the Accounting Equation
• The Accounting Equation when only the owner provides resources.
Assets = Equity (Capital)
Commencement of a business by Dhananjaya investing Rs. 100,000.

Assets - Capital
100000 - 100,000
(Cash) (Capital)
• The Accounting Equation when the owner and external parties have provided resources.
Assets = Capital + Liabilities
Obtaining a bank loan of Rs. 50,000 for a business set up by Dhananjaya.

Assets - Capital + Liabilities
150,000 - 100,000 + 50,000
(Cash) (Capital) (Bank Loan)
Instances where "Equity" changes

• Introduction of additional capital
• Purchases
• Income
• Expenses
27
The Accounting Equation when introducing additional capital.
• Assets (cash) increases
• Equity (capital) increases.
eg. Information on the business set up by Sapumal Bandara.
2013.3.1 investing Rs. 200,000 and setting up the business.
2013.3.5 investing the lottery prize money of Rs. 40,000 on the business.
Date Assets Equity (Capital)

2013.3.1 Cash 200,000 Capital 200,000
2013.3.5 Cash 40,000 Capital 40,000
240,000 240,000
Values are as below after influence of transactions as of 2013.3.5.
Assets = Equity (Capital)

Rs. 240000 = Rs. 240000
The Accounting Equation with drawings.

Drawings is the accession for personal use, money, goods, stocks or other assets belonging to
the business by the owner of the business.
• Decrease assets
• Decrease equity.
eg. As at 2013.3.5 the assets of Rs. 240,000 including equity is Rs. 240,000 on 2013.3.8
the owner of the business Sapumal Dhananjaya drawings of Rs.5,000 for personal use.
As a result of this transaction the Accounting Equation is as below.
Date Assets Ownership (Capital)

2013.3.5 240,000 240,000
2013.3.8 Cash - 5,000 Withdrawal - 5,000
235,000 35,000
After the transaction of 2013.03.08 the value is as below.

Assets Equity (Capital)
Rs. 235,000 Rs. 235,000
The Accounting Equation with the transactions related to "Income"

• Cash sales, credit sales, commission receipts, interest receipts, investment, income etc is
income.
• Increase Assets
• Increase equity
in the business as a result of income.
28
eg. As of 2013.03.08 the total assets of the business is Rs. 235000, total equity of the
business is Rs.235,000. Given below are a few transactions that took place in that business.
On 2013.3.10 sales Rs. 15,000.
2013.3.12 credit sales Rs. 20,000. 2013.03.14 interest Rs. 4,000
When the effect of the transactions above is shown through the Accounting Equation.
Date Assets Equity

2013.3.8 235,000 235,000
2013.3.10 Cash + 15,000 Sales + 15,000
2013.3.12 debtors + 20,000 Sales + 20,000
2013.3.14 Cash + 4,000 Interest + 4,000
income
274,000 274,000
The accounting Equation with the transactions related to "expenses"

decrease Assets
decrease equity
As of 2013.3.14 the assets of Rs. 274,000 and the equity Rs. 274,000.
Given below are a few transactions of a business

2013.3.15 Wages Rs. 6,000
Advertisement Rs. 14,000
Date Assets Equity

2013.3.14 274,000 = 274,000
2013.3.15 Cash - 6000 Wages - 6,000
Cash - 14000 Advertisement + 14,000
254,000 254,000
Exercises 2013 Transactions in Samans business are as below'

2013.4.3 Investing Rs. 200,000 in the business.
2013.4.5 Purchase of stocks Rs. 50,000
2013.4.6 Purchases stocks on credit Rs. 25,000
2013.4.7 Obtained a bank loan Rs. 100,000
2013.4.9 Sales Rs. 75,000
2013.4.12 Bought a computer 50,000
2013.4.13 Sales Rs. 25,000
2013.4.15 Advertisement Rs. 2,000
Power Rs. 1,000
Wages Rs. 5,000
29
2013.4..20 Income from commision Rs 2,500
2013.4..25 Payment of Bank Instalement Rs 20,000
2013.4..25 Withdrawals Rs 5,000
2013.4..25 Furniture Rs 12,000
2013.4..26 Rs 150,000 worth Motor Bicycle invested as extra capital
As a result of this transactions the influence on the accounting equation is as below
Assets = Equity (Capital) + Liabilities
1 Cash 200,000 = 200,000

2 Stock +50,000 =
Cash (50,000) .........................
3 Stock +25,000 = ........................ + 25,000,Creditors
4 Cash +100,000 = + 100,000, Bank
Loan
5 Cash + 75,000 = Sales +75,000 + ..........................
6 Computer +50,000 = ....................... + .........................
Cash - 50,000
7 Stock - 20,000 = Profit + 5,000
Debtors + 25,000
8 Cash - 8,000 = advertisement - 2,000
Electrycity - 1,000
Wages - 5,000
9 Cash + 2,500 = Commision+ 2,500 +............................

10 Cash - 20,000 = ............................ + (20,000),Bank loan
instalment
11 Cash - 5,000 = Withdrawals-5,000
12 Cash - 12,000 =
Furniture +12,000
13Motor Bicycle + 150,000 = Extra Capital+150,000 +...............................
524,500 + 4,195,00 + 105,000
30
Discuss about the Assets, Liabilities, Income, Expenses and Equity in terms of the transaction that
occured in the Canteen,Cooperative,or Grocery in your school.
Using the text book develop transactions relevant to each component above.
Using the text book provide guidance to students on the application of these transactions as an
accounting equation.
Discuss a number of ways in which transactions that occur in business of this type and involve the
students in exercises.
For this competency level, employ a number of lessons so as to disclose the relevant subject matter
and the learning outcomes that should developed in the students from introduction to accounting to
the entry of transactions in the accounting equation.
Quality Inputs
• Business and Accounting Studies Text book for grade 10 related lessons.

1. States the main objective of accounting.
2. Develops several transctions and applies them in the accounting equation.
3. Presents separately the affect that the transactions below have on the components of the
accounting equation.
Purchase of stock Rs. 50,000
Sales Rs. 12,000 on credit which cost of Rs. 10,000
4. Developes accounting equation in instances where there are external liabilities.
5. Names three transactions that affected change in the equity and writing out how they affected
equity.
31
Competency 4 : Records the transactions in a business.
Competency Level 4.2 : Records the dual affect of a transaction in accordance with the
double entry systems.
No. of Periods : 08
Significant Learning Outcomes :

outcomes.
• Demonstrates the dual affect of a transaction.
• Presents the double entry system.
• Names the categories of Accounts in the ledger.
• Records the transactions in ledger.
The dual affect of a transaction. There's a dual affect in any transaction. It can be presented
as follows.
Transaction The Dual affect
1. Introducing capital increase cash

increase equity
2. Purchase of goods. increase (stock) assets.
decrease (cash) assets.
3. Obtained bank loan. increase (cash) assets.
increase (bank loan) liabilities.
4. Cash sales. increase (cash) assets.
increase sales revenue.
5. Payment of employee wages. increase wages expenses.
6. A motor vehicle as additional increase (Motor vehicles) assets
capital. increase equity.
7. Drawings in cash. decrease equity.
8. Settlement of a bank loan. decrease (Bank loan) liabilities
9. Credit sales increase sales revenue.
increase (debtors) assets.
10.Credit purchases increase (stock) assets.
increase (creditors) liabilities
32
The Double Entry System :
The way of recording the dual affect of a transaction as 'debit' and 'credit' in two ledger
accounts at the same time is known as the "Double Entry System".
The recording is carried out under 5 basic principles known as basic double entry principles.
These double entry principles are as follows.
1. Increasing equity - Capital Acc. Cr.

Decreasing equity - Capital Acc dr
2. Increasing liabilities - Liability Acc Cr.

Decreasing liabilities - Liability Acc dr.
3. Increasing assets - Asset Acc Cr.

Decreasing assets- Asset Acc dr.
4. Increasing Expenses - Expense Acc Cr.

Decreasing Expenses - Expenses Acc dr.
5. Increasing income - Income Acc Cr.

Decreasing income - Income Acc dr.
The Account and its Format

All financial transactions involving the business are recorded in a format called an account.
There are 5 types of ledger accounts in a business.
1. Asset Account
2. Liability Account
3. Equity Account
4. Revenue Account
5. Expense Account
• The ledger
The ledger is the book where various ledger accounts are maintained.
33
The format of an Account
............................... Account
Debit Credit
Date Descriptions L Amount Date Descriptions L Amount

P P
The double entry of the transaction

Double entry emerges as the result of any transaction being entered in two accounts as follows.
Maintaining double entries related to the transactions
The transaction The double entry Rs.

1. Investing capital Cash acc dr 50,000/-
Rs. 50,000/- Equity cr 50,000/-
2. Purchasing a stock Rs. 12,000/- Purchases acc dr 12,000/-
Cash acc. cr 12,000/-
N.B. Purchase of stocks is entered in the purchases account and not in the stocks account,
until it is sold, even though the stock assets increase.
3. Receipt of a bank Cash acc dr 60,000/-

loan 60,000/- Bank loan acc cr 60,000/-
4. Sales Rs. 5,000/- Cash acc dr 5,000/-
sales income sales acc cr 5,000/-
5. Payment of wages to Wages acc dr 3,000/-
employees 3,000/- Cash acc cr 3,000/-
6. Investing on the Motor Motor vehicle acc dr 100,000/-
vehicle cost Capital acc cr 100,000/-
Rs.100,000/- by the owner
of the business
7. Drawings in cash Rs. 1,000/- Drawings acc dr 1,000/-
Cash acc cr 1,000/-
8. Paying bank an instalment of the Bank loan dr 10,000/-
Cash acc cr 1,000/-
9. Credit sales Rs. 20,000/- Debtor's acc dr 20,000/-
Sales acc cr 20,000/-
10.Credit purchases of Purchases acc dr 45,000/-
stocks 45000/- Creditor/s acc cr 45,000/-
34
Posting Transactions to Ledger Accounts
Dr Cash Account Cr
Rs. Rs.
1. Capital Acc 50 000 2. Purchases acc 12 000
3. Bank Loan 60 000 5. Wages acc 3 000
4. Sales acc 50 000 4. Drawings acc 1 000
8. Bank loan acc 10 000
balance c/d 134 000
160 000 160 000
balance b/F 134 000
cd • balance carried down

bf •• balance brought forward
Capital Account
b/c/d 150 000 (1) Cash acc 50 000

(6) M. Vehicle acc 100 000
150 000 150 000
Purchases Account
2. Cash 12 000
10.Creditors 45 000
Bank Loan Account
8. Cash acc 10 000 (3) Cash acc 60 000

b/c/d 50 000
60 000 60 000
b/b/F 50 000
Sales Account
b/c/d 70 000 (4) Cash acc 50 000

(9) debtors acc 20 000
70 000 70 000
b/b/F 70 000
35
Motor Vehicle Account
Dr Cr
6. Capital acc : 100 000
Drawings Account
7. Cash acc: 1 000
Debtors Account
9. Sales acc: 20 000
Creditors Account
10 Purchases Acc. 45 000
After the transactions of the accounting period have been recorded in accounts following
double entry principles, make the students get used to balancing each account and carrying the
balance foreward.
Assign several exercises of this type to the students and check their accuracy.

• Write down five transactions with amount, such as assets, liabilites, revenue, expenses, eq-
uity, drawings, introducing additional capital, settling the loan instalements etc., on cards or in
paper strips.
• Write down the double entries related to the above five transactions on five separate cards or
strips of paper.
• Put all the cards and paperstrips prepared into a box.
• Call upon five students one after the other and instruct them to draw out a card at random.
• Provide the following instructions to the students.
• Name the
asset account
liability account
equity account
revenue account
expense account related to the transaction or the double entry mentioned on the card or
the paper strip received by each.
• If a transaction has been received find out the relevant double entry from the student who has
already got it and vise versa.
• Let them write down the transaction double entry and the relevant account for each and every
transaction (all the five transactions) in the note book.
• Get the cards changed until each student has got all the five cards and noted them down.
• Let them transfer these transactions in the relevant ledger accounts.
36
Quality Inputs
• Business and Accounting Studies Text book for grade 10 related lessons.
Criteria for Evaluation and Assessments

• Posting all the transactions in a business to the ledger as follows.
Cash Account
Dr Cr
1. Capital Acc 100 000 3. Purchases Acc 20 000

2. Bank Loan 50 000 5. Equipment Acc 30 000
4. Sales acc 40 000 6. Bank Loan Acc 10 000
8. Commission 7. Advertising Exp. Acc 2 000
received Acc 5 000
10.Debtors Acc 4 000
Debtors' Account
9. Sales 50 000 10.Cash 4 000
Purchases Account
3. Cash 20 000
11.Creditors 15 000
Creditors Account
11.Purchases 15 000
Sales Account
4. Cash 40 000
9. Debtors 50 000
1. Listing out the transactions that took place in the business, in order.
2. Writing down 5 business transactions along with the amount, posting them to the ledger ac-
counts in the double entry systems and balancing the accounts.
3. Studying an event created on assumed data and
1. Stating the dual effect of each.
2. Stating the relevant doubt entry.
3. Preparing the ledger accounts.
4. Write down the doubt entry related to each transaction mentioned in the following table.
37
5. Writing the dual effect of each transaction mentioned in that table.
Transaction Double entry
1. Credit sales
2. Credit purchases
3. Bank Loan
4. Cash received from debtors
5. Settling of bank loan
6. Cash drawings
7. Paying rent
8. Received commission
9. Investing additional Capital
10.Purchase of Equipment
38
Competency 5 : Records the transactions in prime entry books and posts them
to the ledger. .
Competency Level 5.1 : Maintains cash book to record cash transactions.
No. of Periods : 03

outcomes.
• Explaining and naming of prime entry books.
• Indicates importance of prime entry books.
• Explains the importance of source documents.
• Names relevant source documents for each prime entry book.
• Explains the cash book and its importance.
• Records transaction in cash book.
• Explains dual role of a cash book.
• Records transaction into the ledger.
Cash book and its importance

Document where records of details of transactions are recorded is known as the source
document. A book where transactions are recorded with the aid of the source document is
known as the prime entry book.
While a source document is born with respect to every transaction, there is the prime entry
book to record them. This can be presented as follows.
Nature of transaction Source document Prime Entry Book
1. Cash receipts Receipts Cash book

Cash payments Vouchers Cash book
2. Cheque payments Cheque

Counterfoil Bank accounts
3. Petty cash payments Petty cash vouchers Petty cash book
4. Purchase of goods Purchase invoice Purchase journal
5. Sale of goods Sales invoice Sales journal
6. Other transactions Journal voucher General journal
39
Information included in a source document.
• Date of transaction
• Names and addresses of parties to the transaction
• Details of transaction
• Total value
• Signature and stamp etc.
Cash book and its importance

The Cash book is a prime entry book where records of cash rceipts and payments of a
business for a particular period are maintained.
Cash book plays a dual role. That is

1. Acts as an account in the ledger.
2. Acts as a prime entry book.
Recording of cash receipts.

• Introduction of capital
• Cash sales
• Receipt of loan
• Cash receipts from debtors
• Rent received
• Interest received
• Sales proceeds from sale of fixed assets.
Recording of cash payments

• Cash purchases
• Payments to creditors
• Bank loan instalment
• Payments of Electricity/Rent/Salary
• Purchase of Fixed Assets
• Cash drawings
Receipt is used to record cash receipts and vouchers are used to record cash payments.
Principle of Assets is used to record transaction in the cash book.

Increases in cash asset Cash book - Debit
Decreases in cash asset Cash book - Credit
40
Format of cash book
Debit Cash book Credit
Date Rec. Details L/F Cash Date Vou. Details L/F Cash
No. (Rs.) No.
Recording of transactions in cash book.

Transactions are recorded according to the double entry principle.
Example
The following transactions are related to Sumana's business for period of two weeks.
Rec. No. 01 01/1/13 Introduction of capital Rs. 50,000

Rec. No. 10 02/01/13 Bank loan Rs. 50,000
Vou. No. 01 03/01/13 Purchase of goods Rs. 30,000
Rec. No. 22 04/01/13 Cash sales Rs. 60,000
Vou. No. 02 06/01/13 Purchase of furniture Rs. 10,000
Vou. No. 03 07/01/13 Salary Paid Rs. 2,500
Rec. No. 07 08/01/13 Other income Rs. 12,000
Vou. No. 04 09/01/13 Cash Drawings Rs. 1,000
Rec. No. 25 10/01/13 Cash Sales Rs. 50,000
Vou. No. 05 15/01/13 Cash Purchases Rs. 25,000
1. Required to
1. Provide double entries of transactions.
2. Record transactions in cash book
3. Record them into the ledger
4. Balancing of cash book and other ledger accounts.
2. Examine the answer according to the student activity
Cash Book
Date R/N Details L/F Cash Date V/N Details L/F Cash
1/1 01 Capital a/c 50,000 1/3 01 Purchase 30,000
1/2 10 Bank loan 50,000 1/6 02 Furniture 10,000
1/4 22 Sales a/c 60,000 1/7 03 Salary 2,500
1/8 07 Other Income 12,000 1/9 04 Drawings 1,000
1/10 25 Sales ac 50,000 1/15 05 Purchases 25,000
Bal. c/d 153,500
222,000 222,000
1/16 Bal. b/d 153,500
41
(1) Cash Account Debit 50,000
Capital Account Credit 50,000

Bank loan Account Credit 50,000
(3) Purchase Account Debit 30,000

Cash Account Credit 30,000

Sales Account Credit 60,000
(5) Furniture Account Debit 10,000

(6) Salary Account Debit 2,500


Other Income Account Credit 12,000
(8) Drawings Accounts Debit 1,000


Sales Account Credit 50,000
(10) Purchase Account Debit 25,000

42
Capital Account
Dr Cr
1/15 Balance c/d 50,000 1/1 Cash a/c 50,000

50,000 50,000
1/16 Balance b/d 50,000
Bank Loan Account
50,000 50,000
1/16 Balance b/d 50,000
Purchase Account
1/3 Cash a/c 30,000 1/2 Balance c/d 55,000
1/15 Cash a/c 25,000
55,000 55,000
1/16 Balance b/d 55,000
Furniture Account
1/6 Cash a/c 10,000 1/15 Balance 10,000
10,000 10,000
1/16 Balance b/d 10,000
Salary Account
1/7 Cash a/c 2,500 1/15 Balance c/d 2,500
2,500 2,500
1/16 Balance 2,500
43
Other Income Account
Dr Cr
12,000 12,000
1/16 Balance b/d 12,000
Drawings Account
1/9 Cash c/d 1,000 1/15 Balance c/d 1,000
1,000 1,000
1/16 Balance b/d 1,000
Sales Account
1/15 Balance b/d 110,000 1/4 Cash a/c 60,000
1/10 Cash a/c 50,000
110,000 110,000
1/16 Balance b/d 110,000
Exercise
01. Following transactionns are related to Jerman Business for the month of December 2012.
Rs.
01/12/2012 Cash balance 150,000
05/12/2012 Purchase of goods 50,000
05/12/2012 Cash sales 75,000
07/12/2012 Credit sales 100,000
10/12/2012 Credit purchase 30,000
12/12/2012 Credit sales 45,000
15/12/2012 Cash sales 50,000
20/12/2012 Cash purchase 40,000
25/12/2012 Bank loan obtained 25,000
26/12/2012 Cash recipts from Debtors 25,000
Cash payments to Creditors 30,000
44
Required
1. Record them in ledger accounts
2. Balance the accounts
3. Name transactions which are not recorded in the cash book.
02. Sales accounts is a/an

1. Expense a/c
2. Asset a/c
3. Liability a/c
3. Income a/c
• The following transactions are related to two businesses for the first two weeks of
January 2013.
Kumari's business Kusum's business
1) Introduction of capital 50,000 1) Obtainment of loan 45,000

2) Purchase of goods 10,000 2) Purchase of goods on credits 15,000
3) Cash sales 40,000 3) Cash sales 25,000
4) Payment of Electricity 5,000 4) Employee salary 4,000
5) Cash drawings 1,000 5) Additional capital 10,000
• Divide the students into two groups giving them each of the businesses.
• Give transactions for each of the groups.
• Ask them to analyse cash receipts and payments
• Instruct them to write double entry for each of their transactions
• Ask them to prepare prime entry books and post them to ledger accounts
• Give a similar activity to the students to develop their subject matter and learning process
Quality Inputs
• Business and Accounting Studies Text book for grade 10 related lesson

1. Writes 3 cash receipts and 3 cash payments of a business (with values).
2. Record them in a cash book and balance the accounts.
3. Supply 4 transactions which will not be recorded in the cash book.
4. Record transactions in a cash book and post them to ledger accounts.
5. Work in a cooperative manner.
45
Competency 5 : Records Transactions in prime entry books and
posts them to ledger accounts.
Competenncy Level 5.2 : Records bank transactions in bank accounts.

Periods : 03
Learning outcomes:
outcomes.
• Name source documents for bank transactions.
• Record cash deposits cheque deposits and cheque payments in a bank account.
• Record dishonoured cheques giving reasons for same.
• Calculate the bank balance.
• Explains the bank ovedraft.

• Source documents
• Cheque deposit slip and cheque counterfoil.
• Record transactions in a bank account.
• Cash deposits
• Cheque deposits
• Withdrawal of money from bank.
• Issue of cheques
• Dishonouring of a cheque.
• Explains how bank overdrafts occur
Teaching - Learning Process

• Present the following transactions of a business to the students and get them to provide
double entry.
• 1/1/2013 Cash receipt of Rs. 10,000 from Sara a debitor.
• 3/1/2013 Deposits Rs. 80,000 in a bank.
• Select the transaction which will be recorded in an account and duble entry.
• Ask students to write a transaction for the following.
• Cash deposits
• Receipt of cheque
• Deposit of receipt cheque
46
• Issue 3 cheques for 3 types of transactions
• Dishonouring of deposited cheque
• Dishonouring of issued cheque
• Instruct students to record bank transactions in bank account and ledger accounts.
• Lead them to balance the bank account.
• Explain how bank overdraft exists.
• Instruct students to practice the following.
1. The following transactions are related to Soorya's business for the month of March 2013.
Rs.
1/3 Bank balance 110,0000
2/.3 Cash sales 50,000
3/3 Deposits 30,000
Paymemt of electricity bill 5, 000
6/3 Paid to Kalum through a cheque. 4,000
7/3 Received Cheque from Sameera 15,000
10/3 Insurance paid by cheque 4,000
12/3 Withdrawal of Money from bank 10,000
15/3 Salary paid in cash 8,000
16/3 Deposit cheque received on 7/3
16/3 Deposit Kamani's, cheque (10,000) on the same day.
17/3 A cheque issued to Kalum was dishonoured
20/3 Rs. 50,000 deposited in the bank
25/3 A cheque which was diposited was dishonoured
• Instruct students to give double entries

• Ask students to give duble entries for the transaction which was held on 25/3
Answer Bank a/c debit 10,000
Kamani Credit 10,000
Kamani Debit 10,000

Bank a/c Credit 10,000
Highlight transactions which will involve bank a/c and cash book.
Instruct students on how to record transactions in a bank a/c and ledger.
47
• Provide a few exercises of this nature to students and direct them to solve same.
• Provide students an exercise where they obtain a bank overdraft.
Bank Account
Date Receipt Details L/F Amount Date Vou. Details L/F Amount
No Rs. No. Rs.
1/1 x x 2/1 x x
10/1 x x 6/1 x x
25/1 x x 14/1 x x
29/1 x x 17/1 x x
29/1 x x 18/1 x x
20/1 x x
22/1 x x
23/1 x x
25/1 x x
31/1 x x
xx
Quality Inputs
• 1. Business and Accounting Studies Text book for grade 10 Lesson.

• Present resource documents for bank account
• Writes 3 transactions which will be recorded in the cash book as well as cash account
according to double entry system
• Explains bank overdraft
• Prepares bank account and balances it with the 4 transactions given.
48
Competency 5 : Records Transactions in prime entry books and
posts them to the ledger accounts.
Competenncy Level 5.3 : Preparation of Bank Reconciliation Statement
Periods : 05
Learning outcomes:
outcomes.
• Explains Bank statement.
• Gives reasons for the differences between Bank Statement balance and bank balance.
• Rectify bank balance.
• Preparation of bank Reconciliation Statement with a favourable balance.

• Explains bank statement.
• Reasons for the differences between bank statement and bank balance.
• Preparation of bank reconciliation statement even balance of bank account and bank
statement agrees.
• Reasons for the difference.
• Rectifies the bank account based on selected reasons for the difference.
• Preparation of bank reconciliation statement based on rectified bank account.
Expect presentation of bank reconcilation statement with favourable balance at this level.

• Explains bank statement
• Guide students to prepare bank statement with the given information.
• Highlight the items which will be recorded in the bank account.
• Give the relationship between balance of bank statement and bank account.
• Give reasons why balance of bank statement and bank account deviate.
49
• Give the following exercise to the students.
Bank Account
1/5 Balance 40,000 1/5 David CH 100 8,000

2/5 Cash Deposit 10,000 9/5 Keels CH 101 5,000
10/5 Saman 6,000 27/5 Electricity CH 102 1,000
22/5 Kumara 4,000 30/5 Rent CH 103 7,000
31/5 Balance c/a 39,000
60,000 60,000
1/6 Balance c/d 39,000
Bank Statement
Date Details Debit (Rs.) Credit(Rs.) Balance (Rs.)

01/05/2013 Balance - - 40,000
01/05/2013 David CH 100 8,000 32,000
02/05/2013 Cash deposit - 10,000 42,000
03/05/2013 Deposit- Samara - 5,000 47,000
09/05/2013 Keells CH 101 5,000 - 42,000
10/05/2013 Saman - 6,000 48,000
28/05/2013 Bank charges 200 - 47,800
28/05/2013 Standing order - Insurance 2,000 - 45,800
30/05/2013 Cheque book charges 100 - 45,700
• Elicit students' ideas about two balances of bank statement and bank account as
of 30/05/2013.
• Instruct them to list reasons for the difference.
• Ask the students to select items which will be recorded in the rectified bank account.
• Guide them to prepare a bank reconciliation statement as of 30/05/2013 rectified bank
account balance.
• Preparation of bank reconciliation statement.
Explain logicaly why we add unpresented cheques and deduct unrealized cheques to
the rectified bank account balance.
• Direct them to prepare a few exercises.
50
Quality Inputs
• Business and Accounting Studies Text book for grade 10 Lesson.

• Names four items included in a bank statement
• Prepares a bank statement with the given information
• Presents reasons for the differencce between bank account and bank statement balances.
• Rectifies the bank account
• Prepares bank reconciliation statement with a favourable balance.
51
Competency 5 : Record Transactions in prime entry books and
posts them to ledger accounts.
Competency Level 5.4 : Record cash discount in cash book
Periods : 03
Learning outcomes:
outcomes.
• Explain cash discounts
• Name source documents for discounts
• Record transactions in cash book to ledger accounts
• Post transactions in cash book to ledger accounts
• Cash discount
• Discount allowed, Discount received
• Name source documents in cash book with discount columns
• Post transactions in cash book from discount column to the ledger
• Discount allowed account
• Discount received account
• Other ledger account
• Double entries for discount columns
• Discount allowed - Discount allowed account - Debit
Debitor's account - Credit.
(Total of discount column in debit side of cash acccount)
• Discount received - Creditor account - Debit
- Discount received account - Credit
(Total of discounts column in credit side of cash book)

• Solve the following example with the students.
• Following transactions occuring in Sumaga's business for the month of April 2013.
Rs.
1/4 Cash balance 50,000
3/4 Cash sales 30,000
4/4 Credit sales - Kamal 150,000
- Kumara 20,000
52
5/4 Cash purchase 40,000
Credit purchase - Asha 30,000
- Nisha 5,000
10/4 Salary paid 1,000
Electricity Paid 2,000
Payment of insurance 1,500
Entertainment expenses 500
15/4 Paid to Asha 9,400 Discount 600
16/4 Paid to Nisha 4,800 Discount 200
17/4 Receipts from debitors
Kamal 9,500 Discount 200
Kumara 19,500 Discount 500
25/4 Purcchase of equipment 10,000
Guide students to record above transactions in cash book with discounts column.
Date Details Discount Cash Date Details Discount Cash
1/4 Balance 50,000 5/4 Purchase 40,000

3/4 Sales 30,000 10/4 Salary 1,000
17/4 Kamal 200 9,800 Electricity 2,000
Kumara 500 19,500 Insurance 1,500
Entertainment 500
Asha 600 9,400
Nisha 200 4,800
Equipment 10,000
Balance c/a 40,100
700 109,300 800 109, 300
Discount Allowed Discount Received
30/4 Debitors 700 30/4 Creditors 800
53
Kamal's Account
Dr Cr
4/4 Sales 15,000 17/4 Cash 9,800
Discounts allowed 200
30/4 Balance c/d 5000
15,000 15,000
1/5 Balance b/d 5000
Asha's Account
15/4 Cash 9,400 5/4 Purchasees 30,000

Discount received 600
30/4 Balance c/d 20,000
30,000 30,000
1/5 Balance 20,000
Kumara's Account
4/4 Sales 20,000 7/4 Cash 19,500

Discount allowed 500
20,000 20,000
Nisha's Account
16/4 Cash 4,800 5/4 Purchase 5,000

Discount allowed 200
5,000 5,000
54
• Instruct students to prepare other ledger accounts.
• Give examples with discount to students.
Quality Inputs
1. Business and Accounting Studies Text book for grade 10 Lesson.

• Explain cash discounts
• Prepare cash book with discount column and post them to ledger accounts
• Transactions of discount column
• Double entry
• Present the ledger
• Explain how discount allowed and received arise by giving examples.
55
Competency 5 : Record Transactions in prime entry books and
post them to ledger accounts.
Competenncy Level 5.5 : Maintain petty cash book to record petty

expenses.
Periods : 03
Learning outcomes:
outcomes.
• Indicates petty expenses
• Names source documents for petty cash book
• Explains petty cash imprest
• Prepares petty cash book with analysis columns
• Explains of petty cash
• Post transactions in petty cash book to ledger

• Explains petty cash transaction with the importance of petty cash book
• Names source documents for petty cash
• Receipt
• Petty cash vouchers
• Explains petty cash imprest
• Prepare petty cash book and post them to ledger
• Balance the petty cash book and reimburse cash

• Guide students to record following transactions in petty cash book according to the format.
Following transactions are related to Mohomed's business for the month of May 2013.
Rs.
1/5 R.N . 003 Cash receipt from the main cashier 2,000
2/5 V.N. 102 Stationary expenses 150
5/5 V.N. 103 Entertainment 200
7/5 V.N. 104 Cleaning 60
10/5 V.N. 105 Postage 200
12/5 V.N. 106 Stamps 50
15/5 V.N. 107 Pens/ Pencils 110
20/5 V.N. 108 Sugar/ Tea 100
56
22/5 V.N. 109 Photocopy 75
25/5 V.N. 110 Registration 105
26/5 V.N. 111 Typewriter ribbon 150
28/5 V.N. 112 Carbon paper 75
29/5 V.N. 113 Entertainment 250
29/5 V.N. 114 Purchase of furniture 750
30/5 Reimbursement of petty cash.
Format of Petty Cash book
Receipts L/F Date Details V.N. Payments Analysis columns
Rs. Postage Entertainment Travelling Other
Quality Inputs
• States the importance of petty cash book.

• Explains the petty cash imprest system and the reimbursement of petty cash imprest,
• Prepares petty cash book with given transactions.
• Reimbursement of petty cash imprest for the relevant period.
57
Competency 5 : Records the transactions in prime entry books and post them
to ledger accounts.
Competency Level 5.6 : Preparation of purchase journal.
No. of Periods : 03

outcomes.
• Explains the importance of purchase journal.
• Names source documents for purchase journal.
• Records transactions in purchase journal.
• Posts transactions in purchase journal to the ledger.

• Purchase journal
Goods purchased on credit for resale are first entered in this journal.
Invoice received from seller at the time of purchase of goods.
• Recording of transactions and posting them to ledger

After recording transactions in daily purchases journal credits them in relevant creditors
accounts on daily basis.
At the end of the period the total on the purchase journal would be debited to purchases
account.
58
Instruct students to study the following diagram.
Step 1 Invoice Invoice Invoice
Step 2 Date Details Value

1/5 Amal 10000
5/5 Binal 20000
20/5 Channa 5000
Transfer to purchase a/c 35000
ledger
Debit Purchase acc Debit Amal a/c credit
Purchase 10000
Creditors 35000
Debit Binal a/c credit
Purchase 20000
Debit Channa a/c credit

Purchase 5000
59
• Instruct students to refer to text book and ask them to list the above transactions.
• Record the following transactions in purchase journal and post them to ledger.
1. Credit Purchases
Date Supplier Value

Rs.
1/5 Kapitta's business 10000
7/5 Nawodya's business 15000
23/5 Shanthi Textiles 25000
27/5 Lalith Denim 50000
28/5 Chathuni business 25000
31/5 Wasanthika's business 5000
2. Credit Purchases
Date Supplier Value

Rs.
5/7 Samantha super tea 5000
10/7 Anit sweet house 10000
11/7 Kamal Bakers 5000
20/7 Nimal Hotel 15000
30/7 Nimasha Food 5000
Quality Inputs

• Gives basis for preparation of purchase journal.
• Names source document related to the purchases journal.
• Records transactions in purchases journal.
• Records transactions in purchase journal and posts them to ledger.
60
to the ledger.
Competency Level 5.7 : Prepare the sales journal.
No. of Periods : 03

outcomes.
• Describes the importance of sales journal.

• Gives source documents for sales journal.
• Records transaction in sales journal.
• Posts transaction from sales journal to the ledger.

• Sales journal
Trade stock purchased on credit for resale purpose are first entered in this journal.
Invoice issued to the buyer can be termed as source document.
• Recording of transactions and post them to the ledger

After recording transactions in daily purchases journal credit them in relevant creditors
accounts on daily basis.
At the end of the period total of purchases journal would be debited to purchases account.

Instruct students to study the following diagram.
61
Instruct students to study the following numbered diagram.
Step 1 Invoice Invoice Invoice
Sales Journal
Step 2 Date Details Value

1/6 Amal and company 5,000
5/6 Nimal brothers 10,000
26/6 Kamani retail business 30,000
Transfer to purchase a/c 45,000
ledger
Debit Sales a/c Credit Debit Amal a/c Credit
Debtors 45,000 Sales 5,000
Debit Nimal a/c Credit

Sales 10,000
Debit Kamani's a/c Credit

Sales 30,000
62
• Instruct students to refer to text book and ask them to list the above transactions.
• Record the following transactions in purchase journal and post them to ledger.
1. Credit Sales
Date Supplier Value

Rs.
2/11 Chathuni Florist 15000
3/11 Nawodya Florist 5000
11/11 Sarani Flower decorators 12000
23/11 Saranga Anthurium 6000
30/11 Wasana 4000
2. Credit Sales
Date Supplier Value

Rs.
1/7 Samantha super tea 15000
5/7 Anit sweet house 5000
14/7 Kamal Bakers 15000
28/7 Nimal Hotel 2000
31/7 Samantha Super Tea 2000
Quality Inputs

• Presents importance of sales journal.
• Gives base source for the preparation of sales journal.
• Records transactions in sales journal.
• Records transactions in sales journal and posts them to ledger.
63
to ledger accounts.
Competency Level 5.8 : Preparation of the general journal.
No. of Periods : 03

outcomes.
• Describes importance of general journal.
• Names source documents for general journal.
• Names types of transactions recorded in general journal.

• General journal
Other transactions which would not be recorded in the cash book. Purchases journal, petty
cash book and sales journal are entered in the general journal.
Date Vo. Description LP Debit Credit

No.
Journal voucher is the source document used to record transactions in the General journal.
Transactions Recorded in General journal

• Adjusting items
Transactions which are not recorded in the accounts for the period, also the transaction
entered in the accounts or any adjustable notes for that period is known as adjusting
items.
• Correction of errors
Errors would occur in prime entry books, or in ledger accounts. Each error requires a
correction entry in the General journal.
64
• Basic explanation is adequate.
• Discuss the examples.
Quality Inputs
• Business and Accounting Studies Text book for grade 10 Lesson

1. States the importance of the general journal.
2. Names source documents relate to the general journal.
3. States the adjustment entries and correction of errors with examples, included in general
journal.
65
Competency 5 : Recording of transactions in prime entry books and posting
them to ledger.
Competency Level 5.9 : Preparation of trial balance after balancing ledger accounts.
No. of Periods : 03

outcomes.
• Posts transactions to ledger from prime entry books.
• Balances ledger accounts.
• Prepares trial balance.

• Posting transaction to ledger from prime entry books

Transactions are first entered in prime entry books and are thereafter record them in the
ledger according to the double entry system.
• Balancing of ledger accounts

In order to get net effect of the "debit" and "credit" sides of the ledger account, balance of the
account could be calculated.
• Trial Balance
Transactions recorded in ledger accounts, from prime entry books should equal in value of
both debit and credit.
Therefore the total of 'debits' should be equal to total of credits. A statement shows debit and
credit balances of ledger accounts known as the trial balance.
.................................. Business
Trial Balance as at ........................ 20...........
Detail L Debit Credit

F Rs. Rs.
66
Instructions for activity planninjg :
• Instruct students to study the following example.
Purchases Journal Sales Journal

Date Details Value Date Details Value
Rs. Rs.
1/6 Asha 5,000 2/6 Nimali 17,000

Nisha 2,000 25/6 Amali 5,000
Debit to Credit to
Purchases a/c 7,000 Sales a/c 22,000
Purchases a/c Sales a/c

30/6 Cash 3,000 Cash 12,000
Creditors 7,000 30/6 Debtors
22,000
Nisha a/c Nimali a/c

Purchases 2,000 Purchases 17,000
Asha a/c Amal a/c

Purchases 5,000 Sales 5,000
67
Cash a/c
1/6 Capital 100,000 2/6 Purchases 3,000

2/6 Sales 12,000 5/6 equipment 10,000
10/6 salary 5,000
30/6 Electricity 2,000
Bal c/d 92,000
112,000 112,000
• Give instructions to post cash transactions to ledger accounts by referring to the text book.
• Guide them to balance the ledger accounts.
• Give instructions for students to prepare a trial balance from 'debit' balances and 'credit'
balances in the ledger accounts.
• Give a few examples to students.
Quality Inputs

• Posting transactions to ledger from prime entry books.
• Balancing of ledger accounts.
• Bring foward, balances of ledger accounts.
• Preparation of trial balance.
68
Competency 5 : Recording of transactions in prime entry books and posting
them to ledger accounts.
Competency Level 5.10 : Rectifying of errors that occur in recording transactions in

prime entry books when posting them to ledger.
No. of Periods : 06

outcomes.
• Lists errors that occur when recording transactions in prime entry books.
• Lists errors that occur when posting them to ledger accounts.
• Identifies errors which will not affect the trial balance and rectifies.
• Describes the importance of the suspense account.
• Rectifies errors in the suspense account.
Instructions for learning lesson planning :

The following errors could occur when recording transactions.

• Ommission of an invoice.
• Over casting/under casting of purchases / sales journal totals.
• Posting of totals of purchases/sales journal to ledger accounts more/less than the actual
values.
• Over/under casting of ledger accounts.
• One entry is correctly entered and another entry of a transaction incorrectly entered.
• Transaction recorded on wrong side of the accounts.
• Transactions completely omitted from the books.
• Compensation of one error with another error.
• Transaction entered in a wrong account.
Instructions for activity planning : i

• Direct students to study the following transactions and how they had been recorded in the
ledger.
Transaction
(1) Credit sale Rs. 15,000
(2) Purchase of furniture Rs. 5,000
(3) Salary paid Rs. 8,000
(4) Advertising expenses Rs. 2,500
(5) Cash receipt from a debtor Kamal Rs. 12,000.
(6) Rent paid Rs. 1,000.
(7) Bank loan obtained Rs. 50,000.
(8) Cash sales Rs. 10,000
69
Sales a/c Furniture a/c
8 Cash 11,000 2 Cash 5,000
Salary a/c Rent a/c
3 Cash 8,000 6 Cash 2,500
Advertising a/c Kamani a/c

4 Cash 2,000 5 Cash 12,000
Cash a/c Bank loan a/c
3 Wages 8,000 Furniture 5,000 7 Cash 50,000

5 Kamal 12,000 Advertisement 2,000
7 Bank loan 50,000 Rent 1,000
8 Sales 11,000
• Guide students to make a double entry for the above transactions by refering to text book.
• Ask students how to post transactions into ledger accounts.
• Inquire about the relationship betwen trial balance and the transactions entered in ledger
accounts.
• Discuss with the students how errors which will not affect the trial balance would affect in
giving correct information.
70
Instructions for activity planning : ii
• Direct students to study the following transactions and how it had been recorded in the
ledger.
Transaction
(1) Wages Rs. 1,500
(2) Sales Rs. 52,000
(3) Received money from debtors Rs. 4,000
(4) Reduced Rs. 4500 when calculation of sales journal.
Cash acc Wages acc
2 Sales 52,000 1. Wages 1,500 1. Cash 1,000

3 debtors 4,000
Sales acc Debtors acc
2. Cash 57,000 3. Cash 4,000
• Guide students to make a double entry for the above transactions by refering to text book.
• Ask students how to post transactions into ledger accounts.
• Inquire about the relationship betwen trial balance and the transactions entered in ledger
accounts.
• Discuss with the students how errors which will affect the trial balance would affect in
giving correct information.
• Discuss the importance of suspense account by studing text book.
• Guide them to solve the following exercise.
71
Exercise (1)
(1) Sales invoice of Rs. 8,000 ommitted from the book.
(2) Salary payment of 5,000 correctly credited to cash account but entered in the salary
account as Rs. 500.
(3) Advertising expenses of Rs. 2,500 not recorded in both cash book and advertising
account.
(4) Insurance expense of Rs. 5,000, credited to cash book by Rs. 5,000 and debited to
rent account by Rs. 5,000.
(5) Machine repair expense of Rs. 2,500 debited to machine account.
(6) Cash receipt of 5,000 from Kamal a debtor entered in Kamanis account.
(7) Cash payment of Rs. 8,000 to Kamal entered twicely in cash a/c and Kamal's account.
Required
(1) Journal entries to correct the above errors.
(2) Suspense account.
Exercise (2)
(1) Purchase of Rs. 12,000 not entered in purchases a/c.
(2) Cash drawings of Rs. 1,000 entered only in cash book.
(3) Salary payment of Rs. 5,000 entered in rent account.
(4) Insurance payment of 2,500 entered in the insurance account as Rs. 500.
(5) Rs. 15,000 goods purchased on credit twicely entered in purchases account.
Required
(1) Journal entries to correct the above errors.
(2) Suspense account.
Quality Inputs

• Gives examples of errors that occur in recording transactions in prime entry books.
• Gives examples of errors that occur in posting entries to ledger accounts.
• Give examples of journals entries to correct errors.
• Correction of errors in the suspense account.
72
Competency 5 : Recording of transactions in prime entry books and posts
them to ledger accounts.
Competency Level 5.11 : Uses technical methods in order to meet quick cash
transactions and to assess its results.
No. of Periods : 02

outcomes.
• Provids ideas on new trends about making cash transactions over the mobile phones.
• Gives examples of making cash transactions over the mobile phones.
• States sdvantages of making transaction using electronic equipments.

Quick payments for transactions

Most of the transactions in business organisations may be implemented over the internet
using mobile phones and computers as a result of the development of communication and
information technology.
Examples - Payments
- Price quotation
- Other cash payments
Transactions through electronic system

From the start to the end the transaction can be done over mobile phones, short message
system or orally. The Computer also helps in its. transactions.
Internet helps to find markets to sell products or services.

Advantages of E- Transactions
• Quick transaction can be expected because required equipment (mobile phone/

computer) are readily available with customers.
• Quick responses can be expected at the same time.
• Save a time.
• A large number of transactions possible simultaneously.

• Invite any banker or a businessmen to your class and ask them to explain the advan -
tages of this field to the students. (40 minutes)
• After finishing the discussion make a note in order to develop subject matter and
learning outcomes.
73
Quality Inputs

• Gives two examples of transactions which can be effected over mobile phones service.
• Gives two examples of transactions which can be effected through computers.
• Gives three advantages of implementing transactions over the phones/computers.
74

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Business and Accounting

Faculty of Science and Technology

Faculty of Science and Technology

First Edition -2014

National Institute of Education

National Institute of Education

Accordingly, the National Institute of Education is in the process or taking ap-

An instructional manual of this nature is provided to you with the confidence

Subject Co-ordination ( Dr.A. Sivanesharajah

Writing Pannel ( Internal

Language Editing ( S.A.D.Gunapala

Instruction for the Use of the Teachers' Guide v

Guidence for Learning-Teaching Process 1 - 74

2.0 National goals

(ii.) Competencies relating to the Personality Development

(i.) Competencies in Communication

(ii.) Competencies relating to the Personality Development

(iii.) Competencies related to the Environment.

(v.) Competencies related to religion and ethics

(vi.) Competencies in Play and Use of Leisure

(vii.) Competencies related to ‘Learning to learn’.

(1) To Inquire the nature of businesses.

Competency Competency Levels Contents Learning outcomes Periods

• Names the stakeholders in a business. 05

2.2 Constructs the basic

foundation to ensure the • Impact of the economic environment

2.3 Constructs the basic

3.0 Constructs 3.1 By inquiring into types

organization based on aim, is selected. 03

3.3 Follows procedures to • Compelets documents in registration of a

4.0 R e c o r d s 4.1 Presents business trans- •

4.2 Records the dual • Dual aspect of business transactions.

5.0 Records • Prime entry books and their 40

Records transactions in the cash book.

5.4 Records transac- • Describes cash discounts

• Explains importance of purchase journal.

• Entries for Rectifying errors

Competency Level 1.1 : Builds up the basic foundation relevant to business.

Specific Learning Outcomes :

Instructions for lesson planning:

Basic terms and concepts

Aims and Objectives of the Business

Businesses that produce goods

Businesses that produce services

• Post offices • Banks

• Garages • Hospitals • Groceries

Land : Land, natural resources

Instructions for activity planning

1. Name the locations seen in the picture.

Criteria for Assessment and Evaluation

Specific Learning Outcomes :

Instructions for lesson planning:

Basic terms and concepts

2. Manager • To inquire whether management activities have been successful

3. Workers • To inquire whether one's employment is secure and

4. Customers • Can quality goods and services be obtained?

6. Lending organizations • Can the loan given be recovered?

7. Banks and Financial • Associating as a party dealing with one's organization

8. The State • Are businesses conducted so as to ensure the security of

9. People • Focussing attention on the service rendered to society

Instructions for activity planning :

Example : Prepare word cards as below.